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  • Writer's pictureGalactic Advisors

Should we be worried about Google and Facebook investing in India?

Google, Facebook, Amazon and Apple testified before the US Congress in the tech antitrust hearing last week. Lawmakers squared off with the chief executives of the tech industry’s four most powerful players. Even though each company is under antitrust scrutiny for different reasons, the committee used last week’s hearing to point out similarities between all four, making the case for future regulatory reform.

This brings us to India. We live in an age where data is the new oil. Mukesh Ambani knows this - which is why Reliance upped their game in Telecom.

Data might be what makes or breaks every country. Do we know how much these Tech Titans know about us? Maybe we need to ask this question to the top two companies who collect data at rates that we cannot fathom. Facebook and Google - these two firms are veterans in this field and they collect data just to provide you personalized content. These tech titans do not and cannot sell your data to third parties.

So the next time, you blindly agree to terms and conditions, think about this - you might be granting Google the permission to track you the entire time even when you haven't turned on your phone! Google not only keeps a track of your search history or the things you have viewed but also keeps a record of the things you have deleted.

Google knows about all the apps stored on your phone. At the end of the day, Google also knows that you are reading this article. Google also keeps a track record of the videos you view on YouTube, it has designed an algorithm that constantly feeds you similar content and the ads similar to your content.

Obviously, when we say Google has access, it sounds like some individual has access to all your information. This is not the case. You need to understand how Machine Learning works in order to understand how Google optimizes what it learns from your information.

Why do Companies need this data? You know the answer. Ad revenue. They create an advertisement profile based on all your activity and ultimately target you with those ads and products which you were previously looking for or the ones which will appease your interests.

And so, we circle back to India. Facebook has acquired a 9.99% stake in Jio at the price of 43,574 crores and Google has acquired a 7.7% stake at the price of 33,737 crores. Facebook and Google aren't the only ones who have invested in Jio. Jio has raised 11,367 crores from KKR an American global investment firm, it has raised 9,094 crores from Mubala a sovereign wealth fund from Abu Dhabi and there are other investments from Intel, Silver Lake, and Qualcomm. Speaking about Google and Facebook, the core reason that these companies invested in Jio are, in less than a span of 4 years Jio has brought 388 million people online.

It is speculated that the numbers will increase and this would prove to be the most profitable investment by Facebook and Google. Another important reason, these firms invested in a country like India is they can clearly forecast the digital boom India will be witnessing in the upcoming years and thus Google has signed an agreement to contribute 10 billion dollars which are 75,000 crores for India Digitization Fund.

Google will invest this amount within 5-7 years through a mix of equity investments, partnerships, operational, infrastructure, and ecosystem investments. This move will not only unlock new opportunities but also power the vibrant ecosystem of applications. Google has prepared an entire roadmap of efficiently helping the Indians to harness AI.

Now, let's talk about the impact Facebook's investment will have on the Indian economy. Facebook through its investment, plans to generate new opportunities for the 60 million small businesses which account for the majority of the jobs in the country.

Their current aim is to change the way traditional businesses in India communicate and

they strongly believe that they would accomplish their dream through the power of Whatsapp.

And this is where the problem begins. Are we setting ourselves up for the Googles, Amazons, Facebooks, Apples and Jios of the world to take over our lives?

Anti-trust laws are in place for a reason. In India, this antitrust law is commonly known as competition law.

Google and Facebook have faced anti-trust lawsuits across the world. An example closer to home would be when Google Pay was launched on Play Store, Google created an anti-trust situation for the other competitors by placing Google Pay on the top whenever a search query was conducted about a payments app Google pay would be the first on the list even though there were other apps existing before Google Pay.

Let's address the other elephant in the room - Cambridge Analytica. Cambridge Analytica is a research firm that partnered with a UK based academic in 2014 in order to create a psychometric model of those individuals who undertook their survey.

But there was a catch in order to answer the survey you had to log in through your Facebook account since Kogan was already using Facebook's data for research purposes. Thus when you logged in, Kogan not only got access to your Facebook account but could also access your friend's data. 2,70,000 people took Analytica's survey and the overall data collected by Kogan from Facebook was of 87,000,000 people.

Cambridge Analytica then targeted the American citizens for specific political advantages. Google it if you want more information.

Side note: That phrase above is what is scary about the world we live in. "Google it". This is how we access all our information. Through one site that has an unprecedented advantage over everything we consume.

Facebook claims that no passwords were stolen. See Facebook's congress hearing from 2 years ago:

Now let's assume we never have a data breach. Do we trust these companies to allow fair competition?

A case study from the Congressional hearing last week make it amply clear that these Companies are in the business of making money.

Facebook's Acquisition of Instagram

Facebook CEO Mark Zuckerberg emailed his chief financial officer, David Ebersman,

“These businesses are nascent but the networks established, the brands are already meaningful, and if they grow to a large scale the could be very disruptive to us,” he wrote. “Given that we think our own valuation is fairly aggressive and that we’re vulnerable in mobile, I’m curious if we should consider going after one or two of them. What do you think?”

Ebersman wrote back

“All the research I have seen is that most deals fail to create the value expected by the acquirer,” he wrote back. “I would ask you to find a compelling elucidation of what you are trying to accomplish.” Ebersman went on to list four potential reasons to buy companies and his thoughts on each: neutralizing a competitor, acquiring talent, integrating products to improve the Facebook service, and “other.”

It’s a combination of neutralizing a competitor and improving Facebook, Zuckerberg said in a reply.

“There are network effects around social products and a finite number of different social mechanics to invent. Once someone wins at a specific mechanic, it’s difficult for others to supplant them without doing something different.”
“WHAT WE’RE REALLY BUYING IS TIME.” Zuckerberg continued: “One way of looking at this is that what we’re really buying is time. Even if some new competitors springs up, buying Instagram, Path, Foursquare, etc now will give us a year or more to integrate their dynamics before anyone can get close to their scale again. Within that time, if we incorporate the social mechanics they were using, those new products won’t get much traction since we’ll already have their mechanics deployed at scale.”

Forty-five minutes later, Zuckerberg sent a clarification to his earlier, looser remarks.

“I didn’t mean to imply that we’d be buying them to prevent them from competing with us in any way,” he wrote.

Obviously, that's not all. There's also Apple's treatment of Amazon kindle and Google's treatment of Yelp.

So the question we have to ask ourselves is Facebook and Google investing in India such a great idea? Obviously, the positives are there for everyone to see. However, India needs to tread with caution. Last thing we need is to have these US giants controlling India.

Co-author: Meet Prajapati


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